Frank CoIs Currently Operating at 80% of Capacity and Is Currently

question 24

Multiple Choice

Frank Co.is currently operating at 80% of capacity and is currently purchasing a part used in its manufacturing operations for $25 unit.The unit cost for Frank Co.to make the part is $30,which includes $3 of fixed costs.If 20,000 units of the part are normally purchased each year but could be manufactured using unused capacity,what would be the amount of differential cost increase or decrease for making the part rather than purchasing it?

• A)$60,000 cost decrease
• B)$40,000 cost decrease
• C)$40,000 cost increase
• D)$60,000 cost increase

---

Definitions:

Sodium Butoxide

An organic compound used as a strong base in various chemical syntheses, derived from butanol.

Iodoethane

An organoiodine compound with the formula C2H5I, used as an alkylating agent in organic synthesis.

Ethoxide

Ethoxide refers to the anion or salt derived from ethanol, typically found in reactions as a strong base or nucleophile.

Iodobutane

An organoiodine compound with the formula C4H9I, used in organic synthesis as a source of iodide.